Question

International trade theory attempts to explain why nations trade and to help predict the direction, composition, and volume of goods that will be traded A variety of different theories have been proposed over the past several centuries to help explain the existence of trade between nations and to help predict whether trade will occur, what products or services will be traded, the direction of this trade, and the volume of this trade. Understanding the differences between these theories helps managers and policy makers to understand whether and how to pursue trade opportunities internationally

Drag each of the general characteristics listed to the international trade theory that it is most associated with:
International Trade Theory
General Characteristics
Government stimulates trade by means of protectionism
Mercantilism Factors that can drive competitive advantage for one economy over another
Absolute Advantage Trade influenced by relative income levels
Comparative Advantage Trade materials that are abundant
Trade most efficiently produced goods
Differences in Resource Endowments
Overlapping Demand
Trade goods and services at a lower opportunity cost than others
Diamond Model of National Competitive Advantage

Answer 1

International trade theories help explain why countries engage in trade, the nature of traded goods and services, and the resulting economic dynamics. Protectionism, comparative and absolute advantages, differences in resource endowments, overlapping demand, and the Diamond Model are key concepts associated with various theories. The WTO is integral in shaping international trade rules and policies.

Step-by-step explanation:

The subject under discussion is international trade theory, which explains why nations engage in trading activities and aims to predict the type, direction, and volume of goods and services that will be exchanged. Each theory has its unique characteristics associated with specific trade dynamics. Here is a list associating the general characteristics to their respective international trade theories:

• Mercantilism: Government stimulates trade by means of protectionism.
• Absolute Advantage: Countries trade most efficiently produced goods.
• Comparative Advantage: Trade goods and services at a lower opportunity cost than others.
• Differences in Resource Endowments: Trade materials that are abundant.
• Overlapping Demand: Trade influenced by relative income levels.
• Diamond Model of National Competitive Advantage: Factors that can result in competitive advantage for one economy over another.

The World Trade Organization (WTO) plays a vital role in facilitating international trade by helping negotiate trade rules, including those pertaining to tariffs, quotas, and nontariff barriers.

Answer 2

International Trade Theory - General Characteristics:

1. Absolute Advantage Trade influenced by relative income levels

2. Comparative Advantage Trade materials that are abundant Trade most efficiently produced goods.

Step-by-step explanation:

• The international trade theory is a part of economics that deals oh aspects of international trade that include exports and imports. Was described by adam smith as welfare economics.

• As the countries having an absolute advantage and comparative advantages in the products they sold in the global markets. According to the Ricardian model the factors endowments were related to land, capital, and labor.